From private power to Site C: Decisions that shaped B.C.’s electricity policy

The following has been released by the Ministry of Energy, Mines and Petroleum Resources and included with the provincial government’s Site C announcement Monday

Government’s decision to proceed with the completion of Site C was driven, in large part, by a series of bad energy policy decisions made over the past decade and a half that put politics ahead of people. These decisions significantly increased the province’s intermittent electricity energy supply and forced upward pressure on electricity rates.

In 2002, the previous government introduced the Energy Plan that mandated that all new power generation opportunities were reserved for private power producers. Through the extensive use of electricity purchase agreements, the board of BC Hydro made long-term commitments to purchase a large supply of new intermittent power, primarily through run-of-river power projects, at prices considerably higher than produced by BC Hydro’s heritage hydroelectric assets.

The board of BC Hydro committed to more than 135 contracts with an average term of 28 years. And while power generated by BC Hydro’s heritage assets cost $32 per MWh, power from IPPs cost $100 per MWh. Today these contracts represent future financial commitments of over $50 billion.

The Energy Plan also changed the structure of BC Hydro and established a standalone BC Transmission Corporation to allow private power producers to access the transmission system and to sell directly to large consumers.

At the same time that BC Hydro was directed to accommodate this new supply of intermittent power, the previous government also instructed BC Hydro to decommission its Burrard Generating Station in Metro Vancouver to address growing concerns about local air pollution and greenhouse gas emissions.

As BC Hydro lost needed electrical capacity to backstop its new intermittent power supply, it was forced to seek new capacity or “firm” power, the type traditionally provided by hydroelectric facilities like Site C.

In 2010, the old government introduced the Clean Energy Act, which exempted a number of BC Hydro projects and power procurement activities from independent review by the BC Utilities Commission including Site C, the Clean Power Call, the Smart Metering Program and the Northwest Transmission Line.

The former government then compounded the financial problems at BC Hydro by directing the corporation to pay dividends to the province from funds BC Hydro had to borrow. The cost of this debt is a direct cost to BC Hydro ratepayers.

Between 2001 and 2017, the old government directed BC Hydro to increase its liabilities held in regulatory accounts from $116 million to $5.597 billion. These costs will have to be recovered from ratepayers in the future.

As a result of these earlier policy decisions, the old government saddled BC Hydro with a new supply of long-term expensive intermittent power, without the electrical capacity to maintain reliable service to its customers.

Faced with challenges of its own making, the old government decided to push ahead with Site C without allowing review by British Columbia’s independent regulator, the BC Utilities Commission.